Derrimut gyms to be sold as debts spiral

Two Derrimut gyms and the floundering fitness empire’s head office are set to be vacated and sold by an insolvency firm.

Derrimut’s sprawling gym sites in Thomastown and Ravenhall, which have thousands of members between them, are being sold off, along with the company’s corporate office in the suburb of Derrimut.

While most of Derrimut’s 24 “super-gym” sites are leased, these three properties are owned with a mortgage by entities operated by founder Nick Solomos, who is fighting to save his company from liquidation by the Australian Tax Office.

An investigation by The Age revealed in September that the rapidly expanding Melbourne gym empire has been failing to pay taxes, staff superannuation, and hundreds of businesses and landlords, while Solomos has been withdrawing millions for personal expenses over several years.

Solomos’ company accounts have been used for $5000-a-week pocket money, to make mortgage payments on his property portfolio, to fund more than $30,000 a week in payments to his ex-wife and to give luxury cars to senior staff.

Sale documents show the outer-suburban properties are being offered vacant to prospective buyers, with expressions of interest due by December 4. They are being rushed to market under the instruction of receivers, Rodger Reidy, who were appointed in September by debt-chasing lenders.

A source with knowledge of the sale, who was not authorised to comment publicly, said the properties were expected to fetch a total of $30 million.

However, it’s unlikely that earnings from the sale would meaningfully assist Derrimut in repaying its spiralling debts to the tax office, staff and hundreds of business and landlords.

All three properties are encumbered by loans with business lenders including N1, Vance Finance and Bizcap.

Real estate agency Stonebridge Property Group has been appointed to manage the sale of the 18,100 square metres worth of land. The agents declined to comment.

The news will be further pain for Derrimut gym members – of which there are about 200,000 – who have been dealing with a souring experience.

Many members have complained of deteriorating facilities and have demanded refunds over badly maintained facilities and poor bathroom hygiene. Insiders say the company struggles to keep up with bills for toilet paper and hand towels, which WorkSafe has flagged as a concern.

Social media pages for the gyms in Thomastown and Ravenhall (which is referred to as the Caroline Springs branch) were promoting as recently as Tuesday the company’s latest membership deal of $399 for a year or $9.95 each week.

Solomos was contacted for comment but did not respond by The Age’s deadline.

The tax office is seeking to appoint liquidators to Derrimut’s primary entity to claw back $12.5 million in tax debts, including unpaid superannuation and penalties.

The matter is scheduled to be heard in the Federal Court on Friday but has been adjourned several times as Solomos scrambles to secure financing.

Major partners of the business are supporting the tax office’s case with claims totalling $2 million. Creditors include gym equipment suppliers Life Fitness and Bench Fitness, sponsored basketball team Melbourne United, government authority ReturnToWorkSA, power company AGL, Del-Re National Food Group and former landlord Bourke Street Properties. They are a fraction of the businesses chasing late payments from Derrimut.

Solomos is facing multiple court battles. Del-Re National Food Group filed a claim in the County Court last month of more than $141,000 over invoices that were allegedly unpaid between November 2024 and January 2025.

The ATO is also separately seeking to wind up a now-dormant company owned by Solomos with a claim of another $2.9 million in unpaid taxes.

Meanwhile in South Australia, the company has been trying to prevent a landlord from shutting its Melrose Park gym and has been hit with a demand by construction company Ikonstruct SA over claims the gym failed to pay for building works.

Finance sources have estimated that to settle his tax debts, Solomos will require about $15 million, and at least another $15 million to clear tardy debts owed to creditors.

Billionaire businessman Adrian Portelli, who is nicknamed “Lambo Guy” and is a prolific buyer on The Block, last month said he was in negotiations to own part of Derrimut.

“We haven’t put pen to paper just as yet, however work has begun in the background,” Portelli said at the time, before noting that Derrimut had a “very complex structure with multiple entities”.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.